Unit VII LDR 7302 Designing Organizations for Competitive Advantage

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Course Learning Outcomes for Unit VII At the end of this unit, you should be able to:

1. Synthesize the different organizational structures. 1.3. Produce new organization structural arrangements to fit an innovative organization design.

4. Summarize organizational design principles.

4.3 Verify that an optimal new design adheres to recommended organization design principles. Required Unit Resources Chapter 4: Structure (ULOs 1.3, 4.3) Read the following sections: Departmentalization or Groupings, Principles of Structure, and Summary. Structure usually is the most frequent manifestation of organization design, as members need locations, and traditionally they would be organized in one or more discrete locations. Even so, the structure could be a process structure instead of a hierarchy, and hybrid or off-site employment is changing what can be represented physically. These changes tend to provide more options and opportunities to be competitive than is the case with traditional organization designs. Chapter 8: Reorganizing, Managing Change, and Transitions (ULO 4.3) Read the following sections: Learning Objectives and Reorganizing and Transition Planning. A new organization design may be developed to solve problems with the organization, and the new or redesign may look promising in this regard. Even so, organizational leaders may discover that the design process creates new problems, leadership-based, as the process generates some confusion, turbulence, routine instability, and is resisted by members who are uncomfortable with change. Organization design and the design process require strong and realistic visions focused on the organization’s goals, leadership talent in guiding the organization through the process, and a dose of luck. This is how organizations are led to change and succeed. Unit Lesson Lesson: New Organization Design or Redesign (ULOs 1.3, 4.3)

New Organization Design or Redesign After exploring organization design with its principles, theories and models, dynamics, and process, leaders are ready to practice designing, which is the focus for Units VII and VIII. After gathering guidance from your supervisor, advice from more experienced organizational leaders, and notes and records from a previous organization design and process, the leader assigned the redesign project must proceed with drafting the course of action for approval and implementation. As with other organizational documents, the key after gathering and absorbing all these insights, information, and guidance is to coordinate the action and gain approval from the appropriate level. The Unit VII assignment is practice with organization design; beforehand, this unit’s study material is a gathering of selected practical insights on how to create, and then conduct an organization design. As explored early in the course, the business leader develops an organization design that shapes it as a legal and productive entity and an idealistic concept. Innovation is encouraged as being good for progress and improvement and as a catalyst for change, but how this can be integrated into an organization design might be driven by organization size and what external stakeholders or customers need from the operation or

UNIT VII STUDY GUIDE New Organization Design or Redesign

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product (Radojevic et al., 2022). The hierarchy at the top is nearly inevitable, as organizations are owned or are collective assets. However, besides what structure is prescribed by necessity are many opportunities to use business experience and imagination to keep what is best in the previous design and add improvements. There will be lines of reporting and decision-making procedures to establish. The operations or production process could be improved by some physical relocations, introduction of hybrid work routines, streamlining of a supply chain, and reorganization of some portions into matrix designs or teams for increased responsiveness (Anderson, 2019). Additional personnel strength could be added to some sections so that temporary Tiger teams, specialized, cross-functional teams, can be formed from these offices for special issues or opportunities and disbanded when their work is complete. The organization design can be planned to allow for shifting efforts, including training members so they are prepared for change in their work. Among all these variables is the prospect or presence of information and organizational data. Information and data use can give the organization a competitive advantage, but it must be gathered and then shared so that knowledge sharing is supporting and empowering parts or modules of the organization at the right times and places.

Logistics in Design Recalling the material from Units V and VI, the designer of a supply chain has several choices that amount to balancing costs of high inventories versus a risk that an order cannot be filled and disappointing a customer or external stakeholder. However, a third design direction, which is sometimes part of the low-inventory or low-cost choice, is the just-in-time production of items for sale. Just-in-time production, an efficient, low-labor, low-sunk-cost organizational approach has always been attractive but was not feasible for widespread adoption until required technology became available with the Information Age, starting in the 1990s. Fatehi and Franza (2020) explore just-in-time production to identify what the organization must do, or even be, to succeed with this approach to creating things. Ideally, supply chains all perform the production roles as they were designed to do; however, supply chains may not be able to function at a just-in-time pace. A different supply chain may have to be designed for just-in-time processing, whether the needed changes are just in one or more modules, or a complete redesign becomes necessary. However, the design is drawn, the authors note the following, which will be useful for designers:

• When there is low or almost nonexistent inventory, there is no significant cushion to deal with surges in demand. Quality control of inventory production, then, is vital. If the supply chain is composed of modules coupled together, and these modules include organization teams, then quality control must be managed at this team level, at least as a minimum.

• Information management and knowledge sharing are required as a core dynamic in just-in-time production. Each module and team must be able to instantaneously share what is going on, so the supply chain can stay responsive. Fatehi and Franza (2020) described this information management as everything from posting the specifications of items that are to be manufactured quickly and within tolerance standards, to control over what external suppliers do. External suppliers’ products must be the right things that fit into the supply chain the right way.

• Decision-making and control should be designed at the lowest practical level, with much of this at team level.

• Top organizational leaders and staff leads will have to exercise flexibility as their routine outlook in a just-in-time operation. For example, financing must be supportive of this other-than-routine way of operating, as the organization’s financing needs will not be uniform over time if its leaders are seizing opportunities as they emerge (Fatehi & Franza, 2020).

Leadership and Risk in Designs

Innovations such as informal designs and just-in-time production are inherently risky, as the concepts are too new to be taken for granted as widespread approaches to organization designs. Whether an organization has adopted an avant-garde design, leaders desire to mitigate risk that is inherent to their operations. As Grabowski and Roberts (1997) explain, risk will vary with specific cases and conditions, but tends to be higher for large-scale operations and among organizations with many touchpoints or coordination contact points with other entities with which it is interdependent.

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A general way to look at this idea is that if there are many places where something can go wrong, it might well do that. The authors offer risk mitigation measures that are lessons learned from organizations in the past. Accidents and mishaps frequently occur after what the authors term an incubation period where indications that something was wrong were visible, but their significance was not understood until it was too late. In safety management terms, this could be thought of as a chain of events leading to a mishap. In a chain of events, a leader’s intervention to mitigate risk or take charge of something not operating correctly should cause the mishap to be avoided, thereby breaking the chain. One risk mitigation measure is to integrate a first-class safety program, as well as empowering organizational leaders to be able to mitigate production risks. Leadership and communication effectiveness are core parts of risk mitigation. Leadership unites organizational members under a shared and mostly common outlook. Included in this outlook are ethics from the core values, set standards, an understanding (in the organizational culture) on how everyone works, and how approachable leaders are in the hierarchy. Risk mitigation in leadership and communications includes ensuring that the channels are open to provide feedback from follower to leader, and that professional candor and constructive inputs are appreciated. Much organizational damage has been the result of the opposite being true in an organization. Authors Levitt et al. (1999) offer specific remedies under leadership and management to mitigate risk and facilitate a consistently effective and efficient production or operations flow. They did this in 1999 when the information technology to support these measures was just coming online. As previously noted, there is immense pressure to quickly produce what is perceived as wanted by the markets. These needs are what drive frequent organization redesigns. Besides mishaps, other nonaccidental problems may arise in production or operations, such as backlogs, external supply chain shortages, idle personnel or processing equipment, transportation assets not positioned in the right place and time, and delays in decision-making. Levitt et al. describe the role of a virtual design team. This team further leverages acquired organizational data but also performs one or more other roles for the organization. With gathered information, the virtual design team can model the organization’s operations, and show something like a dry run where issues may occur with forecasting and statistical results. The virtual design team also could model contingences, such as whether the organization should sell products by mail or in a store. Without interrupting this core mission, other support roles may be assigned to this ideally innovative team, such as red team operations or modeling what opposition actors such as competing organizations might do. This may provide faster insights for better decision-making under market competition.

A Few Notes on the Design Process Even while business leaders are refining the developed organization design, it is likely that they are working out the design process to emplace this design. Here are some points to consider:

• One way to plan the process is to start with the end in mind. This is a positive outlook at any time one commences with a project, but in the case of an organization, a leader working on the design should be able to visualize its new operations. How does the organization get from the present to that end state?

• Reflect on your organization as its leader. Is it better for all if the transition is rapid, or are there some phases that should be drawn out? What are the reasons bearing on the process? These could include comparative costs, lost or gained opportunities, and a sense that some position in either direction seems the right thing to do with the people at hand.

• Pathways of sequential events of several choices can be diagrammed, and this representation, a PERT diagram (program evaluation review technique) has been an engineering tool for decades since development by the U.S. Navy, and it has existed as a general concept probably far longer (Archibald, 2017). Most PERT diagrams are lines connecting information nodes, or circles, starting as the representation of the project’s start until its finish when the lines meet before or at the final node. To identify the nature of the lines, project tasks and their respective durations are listed. If tasks have prerequisite actions that must happen beforehand, these are noted. When these nodes of tasks are connected, the durations are compared and added to determine how long the project is estimated to cost in time. The critical path of these connecting lines is the shortest and most efficient way to

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complete the project. A design process can be mapped as a PERT diagram. Leaders can use this diagram as a guide in overseeing the process until transition is complete.

Conclusion

Developing an organization design as a significant agent of change may be a daunting project and may even be one that a leader did not welcome. Pertinent details, including ideas explored in this course, may seem overwhelming to capture and synthesize into an organization’s solution. However, with careful preparation and thorough research and coordination, such a step, seen as a need to improve, should be a promising one.

References Anderson, D. L. (2019). Organization design: Creating strategic and agile organizations. SAGE.

https://online.vitalsource.com/#/books/9781544338002 Archibald, R. D. (2017, January). Five decades of modern project management: Where it came from – where

it’s going. PM World Journal, 6(1), 1–9. Fatehi, K., & Franza, R. M. (2020). Systems considerations for adopting just-in-time production. Journal of

Competitiveness Studies, 28(2), 143–157. https://www.proquest.com/docview/2474299716?pq- origsite=gscholar&fromopenview=true&sourcetype=Scholarly%20Journals

Grabowski, M., & Roberts, K. (1997, Summer). Risk mitigation in large-scale systems: Lessons from high

reliability organizations. California Management Review, 39(4), 152–162. https://doi.org/10.2307/41165914

Levitt, R. E., Thomsen, J., Christiansen, T. R., Kunz, J. C., Jin, Y., & Nass, C. (1999, November). Simulating

project work processes and organizations: Toward a micro-contingency theory of organizational design. Management Science, 45(11), 1479–1495. https://www-jstor- org.libraryresources.columbiasouthern.edu/stable/2634854

Radojevic, P., Sudarevic, T., Dosenovic, D., & Boskovic, A. (2022). Organizational design in export framed by

product strategy and firm characteristics: A descriptive, predictive, and prescriptive analysis. Journal for East European Management Studies, 27(3), 382–403. https://doi.org/10.5771/0949-6181-2022-3- 382